Manufacturers Association survey shows only half of Israel's manufacturing activities expected to remain in country within two years

Navit Zommer |Published: 14.12.11 , 15:19

Thirty-four percent of Israel's
industrial companies plan to move some of their production activity abroad within two years, according to a survey conducted by the Manufacturers Association of Israel among 235 factories.

The survey also shows that only half of Israel's production activity is expected to remain in the Jewish state after the planned transfer abroad. A quarter of the companies manufacturing abroad say they have received aid from the countries they moved their activity to.

"Within about two years, half of Israel's industrial factories will be manufacturing abroad," warned Manufacturers Association Director-General Amir Hayek. "An unprofitable industry won't live here. It either shuts down or seeks profits elsewhere.

"In the meantime, all the manufacturers see is moving in one direction: Property tax is becoming more expensive, energy prices are increasing, water prices are hiking, salaries are going up, transportation costs are increasing and regulation imposes many expenses. So the government must decide whether it wasn't an industry or not."

Sixty-six percent of local companies planning to move their production activity abroad said the goal is to do so as an alternative to production in Israel – some are planning the move as a partial alternative and 10% as a full alternative to production in Israel.

The transfer of production activity abroad is expected to affect local activity. According to the companies' reports, only 53% of all manufacturing activities are expected to remain in Israel.

Additional factors mentioned by the companies as part of their consideration to transfer production activities abroad include cheaper raw materials, close proximity to target markets, cheaper municipal and governmental taxes, lower transportation costs, professional manpower and governmental incentives (grants, tax benefits, etc.)